Overview

Introduction.
Kyoto Protocol & Carbon Credits. How Carbon Credits Work.

Criticism
Big Bosses are not fulfilling their duties. Conclusion

Introduction
Gases emitted by industries like carbon dioxide, methane, nitrous oxide, hydro fluorocarbons (HFCs) increase the atmosphere's ability to trap infrared energy and thus affect the climate.
Global warming is caused by the build up of these greenhouse gases.

Global Warming is main threat to whole world. It is estimated that due to global warming sea level will rise & most of the coastal cities will sink in sea in next 100 years.

So whole world agreed on reducing emissions . The concept of carbon credits came into existence as a need for controlling emissions. The mechanism was formalized in the Kyoto Protocol, an international agreement between more than 170 countries, and the market mechanisms were agreed through the subsequent Marrakesh Accords.

Kyoto protocol
Kyoto is a 'cap and trade' system that imposes national caps on the emissions of Annex I countries.
On average, this cap requires countries to reduce their emissions 5.2% below their 1990 baseline over the 2008 to 2012 period.

Flexible mechanisms such as Emissions Trading, the Clean Development Mechanism and Joint Implementation.

It allows Annex I economies to meet their greenhouse gas (GHG) emission limitations by purchasing GHG emission reductions credits from elsewhere. It can be through financial exchanges, projects that reduce emissions in non-Annex I economies. Although Kyoto created a framework and a set of rules for a global carbon market, there are in practice several distinct schemes or markets in operation today, with varying degrees of linkages among them.

What are Carbon Credits

Carbon credits provide a way to reduce greenhouse emissions by capping total annual emissions and letting the market assign a monetary value to pollute the environment. Credits can be bought and sold in international markets at the prevailing market price. Credits can be used to finance carbon reduction schemes.

For each tonn of carbon dioxide (the major GHG) emission avoided, the entity can get a carbon emission certificate which they can sell either immediately or through a futures market, just like any other commodity. Policies that provide a real or implicit price of carbon could create incentives for producers and consumers to significantly invest in low-GHG products, technologies and processes. Such policies could include economic instruments, government funding and regulation.

How Carbon Credits Work

It reduces emissions, either by investing in 'cleaner' machinery and practices or by purchasing emissions from another operator who already has excess 'capacity'. Carbon credits create a market for reducing emissions by giving a monetary value to the cost of polluting the air. By treating emissions as a market commodity it becomes easier for business firms to understand and manage their activities.

Criticism
Numerous scientific studies conclude that warming of the entire solar system is part of a natural cycle & not by man made reasons.
If we really want to reduce pollution, its necessary to have a competent regulatory body that can give credits only to companies and projects that need the credits to succeed. The vast majority of schemes that sell carbon credits to offset pollution are delivering 30% less than they promise.

The global carbon credit market is expected to be around $70 billion this year and this figure will grow exponentially as governments come on board with similar programs. Such an amount of money will attract scam artists worldwide. Buying carbon credits might make you feel better about all the pollution you're generating, but that doesn't make it any less harmful.

Big Bosses are not fulfilling their duties

Sabotaged by Clinton, abandoned by Bush, attended halfheartedly by other rich nations, the global climate talks have so been a total failure. The U.N. suggests that rich nations should be transferring $ 50-75bn a year to poor ones to help them cope with cope with climate change. But nothing like this is happening.

A newspaper investigation reveals that the rich nations have promised $ 18bn to help the poor nations over the climate change issue, but have disbursed only 5% of it.

It is also revealed that the poorest of the poor nations have received least out of this amount of money. Africa, the poorest continent has received less than 12% of all the climate fund money spent in last 4 years.

Conclusion
Trading may be a more complicated means of achieving the objective.

It is just like postponing the situation. Although it is good as seen by economic prospective.
Instead of this we should look for a new solution for this problem which is more realistic.

THANK YOU